Oxford Books' story didn't have to end the way it did

The liquidation of Oxford Books is a tragedy to thousands of readers who have affectionately patronized Atlanta's contribution to the highbrow world of retail literature. But to people who glimpsed the company's last chapter, the real miscarriage is that this company's demise might have been avoided. Oxford Books was victimized by many familiar villains facing every small-business owner every day.

Money plays an important role in the growth of any small business and, of course, Oxford took on massive debt to provide our city with the largest selection of front list titles, reference volumes, collectibles, rare manuscripts, first editions, and countless other book categories, as well as exotic periodicals from around the world. Success gradually swallowed this company, and people were lined up to feed it more money.

In 1989, Oxford's bank gladly extended financing to move and expand the company's premier bookstore to Pharr Road. Although no one intentionally gets a bad loan, some of them certainly turn out that way. Oxford was suckered into a poorly structured loan deal that left very little room for error. As soon as a recession began in 1990 and the company's performance slowed along with most of the nation's retail sector, the company's big bank dropped it before a good layer of dust had settled on the new store.

Oxford's note was discounted and sold to a group of Wall Street sharks. Oxford's ultimate default had less to do with its inability to make monthly payments than its failure to find a new lender.

Oxford limped on with the looming threat of a short-term obligation maturing as the bookselling industry began gyrating through a period of substantive changes. These changes produced more new titles (estimated at more than 40,000 per year) written by more new authors to be sold by more new booksellers than ever before. The results were fierce price wars, choking inventories, and finally the mortally wounded, like our dear friend Oxford Books.

No one could have seen these changes better than company founder Rupert LeCraw. Unfortunately, he was powerless to defend his turf from the onslaught of discount chain booksellers without the support of a committed financial partner.

Oxford's story is not rare. Millions of small businesses face these kind of problems each day. The "golden rule" in business (those with the gold make the rules) forces entrepreneurs to conform to strategies often at odds with their successful instincts or more informed preferences. Many businesses suffer at the hands of a frightened money partner that can only visualize its own short-term repayment.

The timing of this company's expansion is perplexing. It attempted an expensive, risky strategy of outgrowing its competition in a shrinking market. While trying to beat the larger, better-financed competitors at their own game, Oxford started expanding at a time that its future was already clouded. This strategy failed, and further eroded its crumbling capital base.

Entrepreneurs are certainly not beyond mistakes. It is common for even the most experienced, savvy business pioneer to stumble royally when seriously challenged. Very successful companies develop a culture of invincibility, which can ultimately blind their ability to see potential threats and overestimate their own ability to manage adversity.

Consider the many high-profile stories such as Apple Computer, whose entrepreneurial managers were ultimately dismissed because the company outgrew the founder's ability to manage in the cutthroat environment of high technology. The founders were obsessed with the marvel of the new science they discovered rather than focusing attention on the mounting financial losses threatening their shareholders.

When success comes fast and relatively easy, management gets surrounded by weaker people who won't challenge management's belief that they cannot be wrong.

Unfortunately, Oxford Books fell into some of these traps. Oxford died a slow, grueling death that could have been avoided. The company had its problems, but it also had many solutions available to it. Management consulted with an army of experts from various disciplines who produced many new concepts and strategic ideas to save the business.

The independence of abstract thinking has the power to turn around a failing enterprise, but sometimes accepting such advice is the equivalent of admitting mistakes or shortcomings, something hard for many entrepreneurs to do.

Management becomes entrenched in the hopes of tomorrow, rather than acting on the realities of today. A siege mentality evolves that ignores the fragmentation of previous successes. Holding out for an optimal resolution, which is often beyond the reach, prevents many entrepreneurs from making tough decisions such as to downsize or even seek bankruptcy protection early enough, until there is little left to protect.